Agenda item

To consider a motion submitted under Standing Order 4.8.12, which was deferred from the meeting of Council on 28 November 2024.

 

An amendment to the motion received is included within this pack.

There was one motion submitted in accordance with Standing Order 4.8.12, which had been deferred from the Council meeting on 28 November 2024.

 

(D) Impact of Family Farm Tax on Rural Communities in North Hertfordshire

 

RESOLVED: That the motion was LOST.

Audio recording – 3 hours 1 minute 23 seconds

 

There was one motion submitted in accordance with Standing Order 4.8.12, which had been deferred from the meeting on 28 November 2024.

 

(D)       Impact of Family Farm Tax on Rural Communities in North Hertfordshire

 

Councillor Ralph Muncer proposed the motion as follows:

 

In the Autumn Budget, the Chancellor of the Exchequer announced reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) from inheritance tax.

 

Currently, APR and BPR are available at a rate of 100% or 50% (based on eligibility criteria) with no cap to the total amount of relief. However, from April 2026 as a result of the Labour Government’s policy, inheritance tax relief for business and for agricultural assets will be capped at £1 million, with a tax rate of 20% being charged above that.

 

HM Treasury has said that 73% of APR claims are below £1 million and so would be unaffected by this policy however, the National Farmers Union have highlighted figures from the Department for Environment, Food and Rural Affairs indicating that the true percentage of farms affected by the APR changes will be 66%.

 

North Hertfordshire is a rural district with 76% of land classed as agricultural, and with farming providing jobs for more than 2,500 people in Hertfordshire and contributing more than £160m to the economy of Hertfordshire and Bedfordshire, this policy will undoubtedly have a significant negative impact on the economy of rural communities across the district.

 

Not only does this policy present an existential threat to the families who have farmed the land in our communities for generations, and who had hoped to pass on their farm to the next generation, but with about 54% of food on the plates of people in North Hertfordshire being produced in the UK, this decision will significantly increase the cost of producing food, leading to higher food prices, as well as reduce British Food Security.

 

Therefore, Council resolves:

 

1.     That the Leader of the Council writes to the Secretary of State for Environment, Food and Rural Affairs to outline the Council’s dismay at this decision and calls on the Government to stop the Family Farm Tax.

2.     That the Leader of the Council writes to the Member of Parliament for Hitchin, the Member of Parliament for North East Hertfordshire and the Member of Parliament for Stevenage, urging them support farmers and rural communities in North Hertfordshire by calling on the Government to reverse the Family Farm Tax.

3.     That the Executive Member for Community and Partnerships engages with local farmers and representatives from rural communities on what Council can do to support them.

4.     To instruct Officers who are writing the North Hertfordshire Economic Development Strategy to work to identify potential opportunities to strengthen and grow the economies of rural communities in North Hertfordshire.

 

Councillor David Barnard seconded the motion.

 

Councillor Ruth Brown proposed an amendment to the motion, as outlined in the reports pack, and advised that:

 

·       She was broadly supportive of the motion, but it failed to recognise the challenging situation farmers found themselves in.

·       Farmers were under the impression that Brexit would provide a better deal than within the EU. The Conservative government failed to manage the change, and the Labour government was making it worse.

·       The primary role of farms was for food production and the payments offered fail to recognise this.

·       Farming was an investment, which often meant farmers were asset rich and cash poor.

·       £1m would buy on average 100acres, however this was short of the 300acres required for a viable commercial farm.

·       Wealthy landowners should be targeted, but these proposals failed to address the issue.

·       Good land management was required to provide sustainable food security for the country.

 

The amendment was seconded by Councillor Matt Barnes.

 

The following Members took part in the Debate on the amendment:

 

·       Councillor Ralph Muncer

·       Councillor Martin Prescott

·       Councillor Matt Barnes

 

Points raised during the Debate included that:

 

·       The amendment highlighted the cost of these changes to family farms and provided context around the economic challenge faced by farmers.

·       The administration costs of this would outweigh the expected returns.

·       The Liberal Democrats had been in government with the Conservatives during some of the last 14 years, during which farmers were supported with more helpful and valuable subsidies.

·       The threshold was wrong and did not target the people expected.

·       The 7 year rule on Inheritance Tax may have kicked in before farmers could take any action.

·       The policy would create too many losers, with the number of farms affected could be 5 times higher than HMRC estimates.

·       These proposals would hit a lot of farmers in Norther Herts, with farm land in this area costing roughly £10k per acre, before the costs of stock, machinery and maintenance.

·       Margins for farms was low, usually around 1%, and even over 10 years no business can afford a tax level above its income, whilst maintaining its viability.

·       The policy would ultimately lead to the splitting of farms and larger estates owned by rich landowners.

·       The amendment would address the repeated blows to farming communities in recent years.

·       The government cannot on one hand claim this policy is required for economic benefits, whilst also saying only a small number of farms would be affected.

 

Having been proposed and seconded and, following a vote, the amendment was LOST.

 

The following Members took part in the Debate on the original motion:

 

·       Councillor Donna Wright

·       Councillor Daniel Wright-Mason

·       Councillor Emma Fernandes

·       Councillor Alistair Willoughby

·       Councillor Martin Prescott

·       Councillor David Chalmers

·       Councillor Nigel Mason

·       Councillor Paul Ward

·       Councillor Matt Barnes

·       Councillor David Barnard

·       Councillor Ralph Muncer

 

N.B. Councillor Sadie Billing left the Chamber during the debate and returned at 23.07.

 

Points raised during the Debate included that:

 

·       There was farm relief of £1m, in addition to the £500k offered to others. Therefore, if a couple owned a farm, they would receive £3m in relief.

·       Reforms would allow beneficiaries to continue to live in the house and pay instalments over 10 years.

·       These changes would support the transition into a more productive and sustainable system.

·       Agricultural land purchases were dominated by wealthy people, which was pushing out farmers and driving up prices. More than 50% of agricultural land bought was by non-farmers, with the tax relief on agricultural land being used more and more by wealthy people to avoid tax. It was not fair that a small pool of wealthy people could claim a significant amount of tax relief when others struggle.

·       These changes would deter private investors from purchasing agricultural land.

·       There were many ways in which farmers could be helped, but maintaining the current system was not appropriate.

·       These changes closed a long criticised tax loophole and would be directly spent on public services.

·       There was a need to fill the £22bn black hole and support hardworking families who had suffered over 14 years. This change was needed to pay into the system to rebuild public services.

·       Farming was being abused by some who were cheating legitimate farmers out of potentially good land.

·       Other support had been put in place for farmers, including £5bn to support sustainable food production.

·       The deal with the EU and deals with countries around the world had harmed farmers and farming in the UK.

·       It was not good for the wealthy to purchase land, and the law needed to catch up to ensure large landowners pay as much as everyone else. However, the numbers used by the Chancellor were wrong and not all landowners should be considered the same. This will end up targeting the small, hardworking, family farmers as the thresholds are too low.

·       This was expected to raise £115m, less than 1% of all tax rises announced in the budget.

·       North Herts was a rural community which relied on farmers who had suffered greatly, and Brexit deals had been detrimental to farmers.

·       1 in 25 farms closed last year and farm income was lower last year than ever before. The Basic Payment Scheme will be reduced by 76% next year. With all this, something needed to be done to support farmers and there were other ways in which tax could be increased. Cuts needed to be thought through, if the government was going to support farmers to sustainability feed the country.

·       The motion focussed on family farms, but large portions of farmland were owned by wealthy people, with some 10k acres of farmland in south North Herts being owned by one organisation.

·       The money could be used to support rural bus services, provide affordable housing to rural areas and improve health and education services.

·       The selection of targets for this policy was wrong and patches have been put in place to mitigate against this bad solution.

·       There was a desire for wealth landowners to pay more tax, but this policy went too far and was not targeted enough. There was a need for reconsideration.

·       There had not been consideration given to tenant farmers, who won’t be directly impacted by this tax, but will feel the knock on effect of the landowner.

·       Partnerships with farmers was needed, but instead of encouraging investing in rural areas, farmers will be saving to pay the inheritance tax bill. The government needed to set out positive vision for farming.

·       Farming and food production was vital to rural economies, as it provided employment opportunities.

·       Farmers who cannot afford this change will not be able to pass their farm onto their families and the land will be bought by mega-landowners, who will create monopolies and higher food prices.

·       Farmers were vital for food security, and everyone needed a farmer at least 3 times a day.

·       Some wealthy landowners had exploited the system, but this was not a reason to penalise family farmers.

·       This would not mean more money for public services, as it was estimated to cost £1bn more than it would raise.

 

Having been proposed and seconded and, following a vote, the motion was LOST.